...Chapter 13 Aggregate Planning True / False Questions 1. Aggregate planning is intermediate-range capacity planning that typically covers a time horizon of one to three months. FALSE Difficulty: Medium TLO: 1 Taxonomy: Knowledge 2. The goal of aggregate planning is to achieve a production plan that attempts to balance the organization's resources and meet expected demand. TRUE Difficulty: Easy TLO: 1 Taxonomy: Knowledge 3. Aggregate planners are concerned with the quality and quantity of expected demand. FALSE Difficulty: Easy TLO: 1 Taxonomy: Knowledge 4. Aggregate planning is used to establish general levels of employment, output, and inventories over an intermediate-range of time. TRUE Difficulty: Easy TLO: 1 Taxonomy: Knowledge 5. The assignment of work to specific machines and people are examples of aggregate planning. FALSE Difficulty: Medium TLO: 1 Taxonomy: Knowledge 6. The output from aggregate planning is a detailed business plan covering the next 2 to 12 months. FALSE Difficulty: Easy TLO: 1 Taxonomy: Knowledge 7. Demand can be altered in aggregate planning by promotion and producing additional product using overtime. FALSE Difficulty: Hard TLO: 2 Taxonomy: Knowledge 8. Capacity can be modified in aggregate planning by promotion and producing additional product using overtime. FALSE Difficulty: Hard TLO: 2 Taxonomy: Knowledge 9. Organizations...
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...AGGREGATE PLANNING Overview of aggregate planning activities An organization must plan its manufacturing activities of variety of level and operate those as a system .Planning help to know where to go, the aim of the organization, the goal, the objective and how these can be accomplished. Planning involves the process of forecasting, budgeting and choosing among alternative. In planning, there are time dimensions which can be classified into long, medium and short range. 1) Long range planning: This is the planning that is generally done annually, focusing on a horizon greater than a year. It usually begins with a statement of organization objective and goals for the next two to ten years. Co-operate strategic planning shows how the goals and objective of the organization are to be established in light of the organization’s capacities and its economics and political environment as projected by it business forecasts. 2) Medium range planning: this is the planning that usually cover the period of from 6 to 18 months, with the increment usually monthly or sometime quarterly. Under the medium range planning, we have some steps of planning which can done within that interval. These include Aggregate production planning, Item forecasting, master production scheduling, rough-cut capacity planning and so on. 3) Short range planning: This covers the period from one day to six months, with the increment usually weekly. The term aggregate is used to indicate that the capacity...
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...AGGREGATE PLANNING Aggregate planning is intermediate-range capacity planning used to establish employment levels, output rates, inventory levels, subcontracting, and backorders for products that are aggregated, i.e., grouped or brought together. It does not specifically focus on individual products but deals with the products in the aggregate. For example, imagine a paint company that produces blue, brown, and pink paints; the aggregate plan in this case would be expressed as the total amount of the paint without specifying how much of it would be blue, brown or pink. Such an aggregate plan may dictate, for example, the production of 100,000 gallons of paint during an intermediate-range planning horizon, say during the whole year. The plan can later be disaggregated as to how much blue, brown, or pink paint to produce every specific time period, say every month. Achieving a balance of expected supply and demand is the goal of aggregate planning. Informal graphical techniques, as well as mathematical techniques are used by decision makers to handle aggregate planning. Informal Techniques Planners often use graphs or tables to compare current capacity with projected demand requirements. The informal techniques provide some general information and insight but not the specific aggregate production details. The graphs below depict aggregate planning using Level and Chase Strategies. LEVEL STRATEGY Quantity ...
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...The Advantages of Aggregate Planning Aggregate planning is a forecasting technique that businesses use in an attempt to predict the supply and demand of their products and services. Mainly, this is done in an effort to save money, streamline operations and increase productivity. To accomplish this, businesses use an aggregate planning model to develop a game plan that will assist them with determining their staffing requirements, materials needed, estimated timelines and budget costs so they can better plan ahead. Minimize Staffing Fluctuations By using aggregate planning to forecast production demand, businesses are better able to predict their staffing requirements. Businesses that need additional employees on a temporary basis tend to fill these positions with workers from temporary employment agencies. Through proper forecasting, a business will be able to reduce or eliminate the need to hire these extra workers. This will save the business both time and money as it won't need to pay the additional fees to the staffing agency and it won't have to pay its own workers to train the new additions. Reduce Overhead Excess inventory costs businesses a lot of money. Additional materials will need to be stored, and having finished products laying around increases the likelihood of damage to the products before they reach the customer. Adhering to an aggregate planning model can help businesses operate in a leaner manner. Managers will be able to better anticipate how much product...
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...Week 3 This week’s discussion of chase strategy matched well with discussions last week related to fast food and Wendy’s in particular. Team A explores chase strategy how Wendy’s, our company of choice from last week’s assignment met these requirements. The Chase Strategy Defined/ Companies Utilizing the Chase Strategy The Chase Strategy is a part of the production planning strategy. It involves trade-offs with workforce size, work hours, inventory and back logs. According to Jacobs and Chase (2011), match the production rate to the order rate by hiring and laying off employees as the order rate varies. The success of this strategy depends on having a pool of easily trained applicants to draw on as order volumes increase. The caveat to this strategy is that employees may feel unmotivated to produce at a higher rate if there’s not much work. This lack of motivation is due to a decrease in the workload and employees may try to stretch the time it takes to process an order or task out of fear of being terminated. This may happen in companies that use a made-to-order approach and may have highs and lows in their production process. Companies that may use the Chase strategy is an automotive company such as Ford Motor Company and temporary agencies that place applicants to a specific job need for a certain period of time. The process is due to aggregate planning. According to Aggregate Planning (2015), in aggregate planning you develop, analyze, and maintain a...
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...Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 4/9/2013 | Time Spent: | 1 h , 22 min , 57 secs | Points Received: | 54 / 60 (90%) | | Question Type: | # Of Questions: | # Correct: | Multiple Choice | 10 | 7 | Matching | 1 | 1 | Short | 6 | N/A | | | Grade Details - All Questions | Page: | 1 2 | 1. | Question : | (TCO 3) Which one of the following is not a JIT Quality tactic? | | | Student Answer: | | use of statistical process control | | | | empowered employees | | | | fail safe methods | | | | provide immediate feedback | | | | use large lot sizes | | Instructor Explanation: | Chapter 16, Page 635 | | | | Points Received: | 2 of 2 | | Comments: | | | | 2. | Question : | (TCO 3) Manufacturing cycle time is best defined as the: | | | Student Answer: | | time between arrival of raw materials and the shipping of finished products | | | | time it takes a unit to move from one workstation to the next | | | | time between the start of one unit and the start of the next unit | | | | time from raw materials shipment to finished product exit | | Instructor Explanation: | Chapter 16, Page 624 | | | | Points Received: | 2 of 2 | | Comments: | | | | 3. | Question : | (TCO 3) Reduction...
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...Class 08 – Planning & Control BUFW M570-01W: Operations and Supply Chain Management Planning & Control: Chapter 19 – Sales & Operations Planning Chapter 20 – Inventory M anagement Learning Objectives Understand what sales and operations planning is and how it coordinates manufacturing, logistics, service, and marketing plans. Construct and evaluate aggregate plans that employ different strategies for meeting demand. Explain yield management and why it is an important strategy. Joseph Khamalah, Ph.D. 2 What Is Sales and Operations Planning? Sales and operations planning is a process that helps firms provide better customer service, lower inventory, shorten customer lead times, stabilize production rates, and give top management a handle on the business. The process consists of a series of meetings, finishing with a high-level meeting where key intermediate-term decisions are made. This must occur at an aggregate level and also at the detailed individual product level. – Major Sales & Operations Planning Activities Aggregate means at the level of major groups of products. 3 4 Sales & Operations Planning Activities – Overview Sales and operations planning was coined by companies to refer to aggregate planning. Types of Planning Long-range planning • Planning focusing on a horizon greater than 1 year, usually performed annually Intermediate-range planning • Planning focusing on a period from 3 to 18 months, time increments are weekly, monthly,...
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...Aditi Ananthakrishnan Cohort A 1. A ‘better’ plan would be a plan that succeeded in minimizing costs while maintaining or increasing profits. I think that for MacPherson, a level strategy would be the most effective because of the concerns involving worker unions. If a chase strategy was employed, the layoffs would adversely affect the morale of the workforce. In order to pursue a level strategy, it is assumed that the efficiency of workers can be thought of as constant. It is assumed that workers doing overtime have lower efficiency due to the extra 40 hours of work per week. This effect is reflected as a 20% decrease in efficiency for overtime workers, while the workers working regular hours are not affected. I suggest that MacPherson build up inventory at the beginning of the cycle based on the aggregate forecast, and that they deal with fluctuations in inventory by adding overtime hours to the existing workforce. The reduction in overtime worker efficiency should be taken into consideration during times of peak demand and the inventory should be adjusted to compensate for this loss in efficiency. 2. Assumptions: * Forecasts of the next year are reliable and accurate * Raw materials are readily available and will continue to be available as required * Worker hours directly and entirely contribute to production hours - Inventory cost/appliance = $8 - Prod./employee/month = 40 appliances (480/12) - Cost per unit: Reg. employees cost $2400/month...
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...CHAPTER 13 AGGREGATE PLANNING The planning Process [pic] Aggregate Planning • Combines appropriate resources into general terms • Part of a larger production planning system • Disaggregation breaks the plan down into greater detail • Disaggregation results in a master production schedule Aggregate planning Strategies 1. Use inventories to absorb changes in demand 2. Accommodate changes by varying workforce size 3. Use part-timers, overtime, or idle time to absorb changes 4. Use subcontractors and maintain a stable workforce 5. Change prices or other factors to influence demand Capacity Options • Changing inventory levels o Increase inventory in low demand periods to meet high demand in the future o Increases costs associated with storage, insurance, handling, obsolescence, and capital investment 15% to 40% o Shortages can mean lost sales due to long lead times and poor customer service • Varying workforce size by hiring or layoffs o Match production rate to demand o Training and separation costs for hiring and laying off workers o New workers may have lower productivity o Laying off workers may lower morale and productivity • Varying production rate through overtime or idle time o Allows constant workforce o May be difficult to meet large increases in demand o Overtime can be costly and may drive down productivity o Absorbing idle time may be difficult ...
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...Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following would NOT generally be a motive for a firm to hold inventories? 1) _____ A) to minimize holding costs B) to take advantage of quantity discounts C) to decouple various parts of the production process D) to hedge against inflation E) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand 2) Which of the following is NOT one of the four main types of inventory? A) work-in-process inventory B) finished-goods inventory C) raw material inventory D) safety stock inventory E) maintenance/repair/operating supply inventory 3) Which of the following is a function of inventory? A) to take advantage of quantity discounts B) to hedge against inflation C) to decouple various parts of the production process D) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand E) All of the above are functions of inventory. 4) Which of the following statements about ABC analysis is FALSE? A) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. B) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis. C) ABC analysis is based on the presumption that controlling the few most important...
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...CHAPTER 13 AGGREGATE PLANNING The planning Process [pic] Aggregate Planning • Combines appropriate resources into general terms • Part of a larger production planning system • Disaggregation breaks the plan down into greater detail • Disaggregation results in a master production schedule Aggregate planning Strategies 1. Use inventories to absorb changes in demand 2. Accommodate changes by varying workforce size 3. Use part-timers, overtime, or idle time to absorb changes 4. Use subcontractors and maintain a stable workforce 5. Change prices or other factors to influence demand Capacity Options • Changing inventory levels o Increase inventory in low demand periods to meet high demand in the future o Increases costs associated with storage, insurance, handling, obsolescence, and capital investment 15% to 40% o Shortages can mean lost sales due to long lead times and poor customer service • Varying workforce size by hiring or layoffs o Match production rate to demand o Training and separation costs for hiring and laying off workers o New workers may have lower productivity o Laying off workers may lower morale and productivity • Varying production rate through overtime or idle time o Allows constant workforce o May be difficult to meet large increases in demand o Overtime can be costly and may drive down productivity o Absorbing idle time may be difficult ...
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...PRODUCTION PLANNING AND CONTROL Assignment A Marks 10 Answer all questions. 1. a) Explain the forecasting process? What are the techniques for monitoring forecasts? b) Explain various forecasting models. a) A planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends. Forecasting starts with certain assumptions based on the management's experience, knowledge, and judgment. Qualitative & Quantitative techniques are the two techniques used for monitoring forecasts. b) There are two types of forecasting models which are : Time Series Models Causal Models or Associative Models 2. a) What is aggregate production plan? What are the pure strategies for APP? a) Aggregate production planning refers to the process of deciding the overall quantities of products to be manufactured or produced in a plant or other manufacturing facility during a medium term planning period such as a month, or a quarter. The aggregate plan output consist of the total quantities of each product or a group of product to be manufactured in the plan period of going into details of scheduling of different manufacturing activities required to achieve the planned production levels. The aggregate production will also not specify details such as the dates when material ordered against individual customer...
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...AGGREGATE PLANNING I. Introduction A. Intermediate Planning B. The Concept of Aggregation II. The Purpose and Scope of Aggregate Planning A. Demand and Capacity B. Inputs of Aggregate Planning C. Demand and Capacity Options AGGREGATE PLANNING III. Basic Strategies for Meeting Uneven Demand IV. Techniques for Aggregate Planning A. Informal Techniques B. Mathematical Techniques V. Aggregate Planning in Services VI. Disaggregating the Aggregate Plan VII. Master Scheduling A. Inputs B. Outputs C. Stabilizing the Master Schedule AGGREGATE PLANNING DEFINITION: • Aggregate planning is intermediate-range capacity planning that typically covers a time horizon of 2 to 12 months. • It deals with translating annual business and marketing plans into a production plan for all products. • It is particularly useful for organizations that experience seasonal or other fluctuations in demand or capacity. GOAL: The goal of aggregate planning is to achieve a production plan that will effectively utilize the organization’s resources to satisfy expected demand. 3 LEVELS WHICH ORGANIZATIONS MAKE CAPACITY DECISIONS: 1. Long-term decisions - relate to product and service selection, facility size and location, equipment decisions, and layout of facilities. 2. Intermediate decisions - relate to general levels of employment, output and inventories, which in turn define the boundaries within which short-range capacity decisions must be made. 3. Short-term decisions - consists...
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...The Chase Strategy OPS/ 571 Prof. Thomas Kenfield Giselle Rodriguez Kyle Welch Introduction When evaluating a business performance, one of the main parts of the business that affects performance is the production process including its inventory and how the company manages inventory. Inventory is affected by the relationship of demand and production that the company follows which we can call the production strategy. There are several production strategies used worldwide by companies, and these have all different impact on inventory and the time it takes for a consumer to have the product on its hand. In order for a company to understand what type of production and manufacturing method will work best for their firm, they need to use aggregate planning. “Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. The aggregate plan generally contains targeted sales forecasts, production levels, inventory levels, and customer backlogs” Inman. 2004. Aggregate Planning focuses on creating a cost effective balance between capacity of production and demand trough Level strategy and Chase Strategy. For this paper we will focus on Chase Strategy. Chase Strategy This strategy aims to match demand and capacity by producing the amount of goods that are demanded or ordered by the customer. This strategy has both advantages and disadvantages which are: Advantages * It allows inventory...
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...L. L. Bean – Forecasting and Planning Tracy Goodhew Capella University Bus-FP3022 October 22, 2015 Business Model L. L. Bean has had a growing and changing business model since 1911. The main focus is and has always been catalog sales of outdoor apparel and gear. The L. L. Bean company began with the mailing of catalogs featuring one product, outdoor hunting shoes, and now “The outdoor apparel and gear maker mails more than 200 million catalogs per year” (Reed, S., 2009). Of course, in this new business era L.L. Bean has evolved and now does much of its business online. “Bean's golden rule was to "sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more". His model, still used today, was to build customer loyalty by providing exceptional service” (Pulido, I.) Supply Chain “Distribution operations are located in Maine and employed nearly 2,500 people during the peak business season in 2014. Over 15 million packages were shipped during 2014, with over one million packages going out during our busiest week. The hub of the L.L.Bean distribution operation is a one-million-square-foot, state-of-the-art facility with the capacity to hold 10 million units. Manufacturing facilities are located in Brunswick and Lewiston, Maine, where over 350 employees produce such iconic products as the Maine Hunting Shoe®, the L.L. Bean Boot and the Boat and Tote® Bag. Customer demand for the iconic...
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